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If you’re on the hunt to buy a house, you might notice there’s been a shortage of new property in certain capital cities.

While auction listings have been high as vendors race to put up their homes for sale, it doesn’t reflect the “10 years of underbuilding” noted by Nick Proud from the Property Council of Australia.

Supply has been tight in searing property markets like Sydney and Melbourne, which have been unable to keep up with climbing demand. As observed by CoreLogic RP Data’s monthly indices, this has lead to soaring dwelling values, with both of these cities respectively seeing a 16.16 and 13.94 per cent annual increase in the year to October.

However, this supply shortfall is soon to change
.New builds on the way

Figures from the Australian Bureau of Statistics show that there was a record high of new housing constructions this year. In 2014 to 2015, 211,976 new homes had been commenced. This marks an increase of 16.9 per cent and “caps three consecutive years of growth for new home building”, mentions the Housing Industry Association (HIA) Chief Economist Dr Harley Dale.

This result has followed in step behind the HIA’s news in the previous quarter, which reported peak building approvals in the June quarter. The 56,351 buildings approved to be built would begin to trickle into the market as they move from planning to construction stages, as seen by the spike of new home commencements.

What does this mean for you?

This will do two things for house hunters across the country. Firstly, prices in the housing market will cool as supply arrives in force. As mentioned by the Property Council of Australia, national residential construction may “create enough housing to satisfy growing demand”.

Figures from CoreLogic RP Data reveal that this stuttering in price growth can already be seen now. Sydney and Melbourne both recorded a 1.5 and 3.1 per cent increase in dwelling values over the September quarter – a notably slow change when compared to previous quarters this year.

If you’re seeking to buy real estate in the near future, this could be good news for you. The market could soon swing in your favour as prices ease in these markets.

Secondly, the influx of new builds will provide buyers a greater choice of real estate in Australia. More new houses for sale mean there’ll be a wider range of property types, house sizes and more, available for people to choose. This will give you greater opportunity to find housing that’s ideal for your needs and lifestyle.

It’s hard to ignore the rapid rate at which homes have been popping up around the country. Construction has been a bright spot in real estate in Australia for some time, with a steady stream of properties helping to support confidence, jobs and keep the economic wheels spinning. Not only that, but it creates opportunities to buy a house.

This impressive activity is showing little sign of slowing down, either, as new figures from the Australian Bureau of Statistics (ABS) show strong growth during May. According to the latest building approval data, the total number of new dwellings approved for construction increased 2.4 per cent during May in seasonally-adjusted terms.

In fact, there has been a 17.6 per cent rise over the 12 months to May. The Property Council of Australia pointed out that this is an encouraging sign for affordability, particularly for real estate in Sydney.

Executive Director Residential Mr Proud noted there were 70,000 more approvals in the past year than in the 12-month period to May 2012, with New South Wales in particular showing strong improvement. Some 57,088 new dwellings were approved in seasonally adjusted terms in NSW for the 12 months to May 2015, a 10 per cent rise on the same period to May 2014. This could represent an important step forward for reducing housing deficits and counteracting rapid price growth.

“The only meaningful way to take the pressure off prices is to increase new housing supply,” Mr Proud said.

Strong growth in multi-unit properties

Construction activity has been especially strong in the apartment segment. Master Builders Australia said multi-unit approvals posted an all-time record in May, with 7,300 dwellings in buildings of four storeys or more approved over the period. While this means multi-unit homes for sale may be more accessible when completed, detached houses still face supply pressures.

Master Builders Chief Economist Peter Jones said policy restrictions on releasing greenfield land may be holding the industry back. This point was echoed by the Housing Industry Association (HIA), which highlighted a 15.1 per cent increase in multi-unit approvals during May. However, approvals for freestanding homes dropped 8.5 per cent over the month.

HIA Senior Economist Shane Garrett said this means policy makers need to do more work to ensure a steady supply of both affordable apartments and houses for sale.

“They must rectify the bottlenecks in the planning system, redress the excessive fees and charges on new residential developments and ensure that the pipeline of residential land will meet the ongoing community demand for new homes,” he concluded.

With such a solid supply of properties in the pipeline, maintaining this level can support affordable and help households buy a home in Australia.

Property investment is a big financial commitment so you want to make sure you get the best bang for your buck. Whatever your long term investment goals, there are a huge array of factors to consider when choosing the ideal property. Here are some ideas to get the ball rolling.

Location counts

Finding the right location for your investment is half the battle. It drives the price and rental returns – and can make your foray into property investment a successful one. When you’re looking for a property do your research. Ask local real estate agents and property management companies about the health of the market. Glance across advertised rental prices and yields – and keep an eye on vacancy rate statistics.

Remember that trends are more powerful than individual results, so consider areas where high growth is expected.

There could be times when you can’t find tenants immediately but these statistics will prepare you for this. In any case, a low vacancy rate suggests you’ll find tenants easily. All this information can give a good idea of the demand for rental property in an area. Depending on your investment goal, you want an area where demand surpasses rental supply – after all, you don’t want an empty property!

Know your market

If you’re renting the property out, understanding your target market is equally important. Families have different preferences than young couples, while retirees are at the other end of the spectrum than students. Look for features that prospective tenants will like. Tenants might appreciate off-street parking, a garage or lots of storage space. It all depends on your target market.

Well-maintained properties often secure higher rents, so consider how much work you will have to do to bring the property up to scratch. A run-down or damaged property may not be worth the investment in the long run.

First National Real Estate CEO, Ray Ellis, welcomed the Prime Minister’s appointment of a new Minister for Population, saying he hoped appropriate action would finally be taken in addressing challenges facing the property market.

“We have been calling for some time for a consistent unified and national approach to the property market,” Mr Ellis said.

“It is heartening to see someone in the government now taking responsibility for this and I hope they will take into account all the relevant factors, not just an isolated few.

“The issues we face as an industry are not limited to population growth, although it is a key driver of the property market.

“Other considerations include protracted, complicated and inappropriate planning processes, high taxes and imposts and the whole supply versus demand issue which is producing a chronic shortage of supply for this country in basically every state.”

According to Mr Ellis, if the government, and in particular, the new Minister for Population are really serious about making sure Australia is ready and well prepared for projected population growth in the next 50 years, they need to ensure representatives from all areas of the industry have a say in what is happening and how the future should look.

“There should be an appropriate forum established where key players in the industry are able to voice their opinions and concerns and put all matters on the table,” Mr Ellis said.

“Then, a vehicle should be created to drive the necessary changes forward. Real estate is an industry that dominates government revenues, as demonstrated by the New South Wales Government’s recent tax windfall of 600 million dollars in unbudgeted stamp duty.

“This is on top of the reported $1 billion bounce in state and territories’ budgets as a resurgent property market boosts stamp duty receipts around the nation.”

Mr Ellis said the critical component was getting strong representation of appropriate industry members, and not just limited to the usual suspects.